No proposal to convert idle gold to bullion: RBI

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SummaryThe Reserve Bank said on Saturday it is not contemplating any proposal to buy idle gold and convert it into bullion.

The Reserve Bank said on Saturday it is not contemplating any proposal to buy idle gold and convert it into bullion.

“The RBI clarifies that no such proposal is under consideration at this juncture,” the RBI said in a statement. There have been media reports that the RBI is considering various options of converting idle gold, including that available with temple trusts, into bullion. Bullion usually stands for gold in form of bars before coining.

Demand for gold is the reason for rise in import of the precious metal. The rising gold import is one of the main reason for the current account deficit (CAD), which widened to a record 4.8% of GDP in the 2012-13 fiscal.

The RBI and the government have already taken steps to control the import of gold with a view to check CAD. The government recently raised customs duty on gold to 10%. Import of gold went up by 87% from 205 tonnes in April-July 2012 to 383 tonnes during the corresponding period this year. In value terms, the increase was 68% from R56,488 crore to R95,092 crore.

The government has targeted a CAD at 3.7% of GDP, or $70 billion, in the current fiscal. India’s CAD, which indicates the excess of imports of goods, services and transfers over exports, touched a record 4.8% of GDP, or $88.2 billion, in 2012-13.

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